Advanced Accounting MCQs with Answers (PDF)

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Accounting and Auditing Job Test Preparation

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1. Double entry book-keeping was fathered by: Lucas Pacioli.
2. Funds Flow Statement and sources and application statement are: Synonymous
3. Depreciation in spirit is similar to: Amortization
4. Balance Sheet is always prepared: As on a specified date.
5. In Insurance, the following Profit and Loss Accounts are prepared: Consolidated for Fire, Marine, and Accidents etc.
6. Partners in Pakistan can today be fixed at the following numbers: 20
7. Flexible budget is a budget with the following features: Changes with volume of production
8. Break Even can be calculated as under: FC I- VC TR
9. Quick Ratio can be computed as under: Current Assets/ Current Liabilities
10. In straight line method of depreciation, the written down value of a fixed asset will be at the end of the life of the asset as under: Rupee zero
11. Sales budget must be prepared: Based on Sales forecasts of market
12. Consolidation of subsidiary accounts in the balance sheet of a unlisted Holding company is at present in Pakistan: Required
13. Retained earnings is synonymous to: Accumulated profit and loss account
14. The requirements of an audit report for Banking Company in Pakistan are under: (a) Under the Banking Companies Ordinance, 1962. (b) Under the Companies Ordinance, 1984. (c) Under (a) and (b) above.
15. Deferred Taxation is: Part of Owners Equity
16. Investment Corporation of Pakistan follows: (a) Open-end mutual funds (b) Closed-end mutual funds (c) None of these
17. Directors Report is —- in respect of financial report constituent. Mandatory for a limited Company
18. Every limited Company in Pakistan is required by law to include the following along with financial reports: Chairman’s Review
19. Cash budget excludes the following: Non-Cash items
20. NGOs are legally required to: Prepare accounts in a prescribed manner under the law
21. Fixed Cost: Never changes even if production capacity is doubled
22. Conversion cost is: Labour Cost + Overhead Cost
23. Process Costing is relevant to: Cement industry
24. Operating Profit is: Profit after deducting normal operating expenses including depreciation
25. A good Cost Accounting System is: If it enables management to increase productivity and rationalize cost structure
26. Verification includes: a. Checking Vouchers b. Examining audit report c. None of the above
27. Stratified audit sample means: Randomly selected items for audit
28. Internal Control is totally synonymous with: a. internal check b. internal audit c. None of above
29. Audit of a bank is generally conducted through: Routine checking
30. An auditor is liable for his annual audit of accounts o: Owners
31. Income Tax is levied on: Presumptive Income
32. If a firm has paid super-tax, its partners may follow any one of the following behaviours: No need to pay income tax, even if the income exceeds the taxable limit.
33. Books of original entry are called: Journal
34. For preparing balance sheets prepaid expenses are shown as part of: Assets
35. Unpaid and unrecorded expenses are called: Accrued expenses
36. Amount, cash, or other assets removed from business by owner is: Drawings
37. Under the diminishing balance method, depreciation amount is: Expenditure
38. Users of accounting information include: (a) The tax authorities (b) Investors (c) Creditors (d) All of these
39. The business form(s) in which the owner(s) is (are) personally liable is (are) the: Partnership and proprietorship
40. The investment of personal assets by the owner: Increases total assets and increases owner’s equity
41. All of the following are forms of organizations except: Retailer
42. Economic resources of a business that are expected to be of benefit in the future are referred to as: Assets
43. An owner investment of land into the business would: Increase owner’s equity
44. A cash purchase of supplies would: Have no effect on total assets
45. An owner investment of each into the business would: Increase assets
46. The payment of rent each month for office space would: Decrease total assets
47. Real accounts are related to: Assets
48. Which one of the following accounts would usually have a debit balance? Cash
49. Quick assets include which of the following? (a) Cash (b) Accounts Receivable (c) Inventories (d) Only (a) and (b) (e) None of these
50. Net income plus operating expenses is equal to: Gross profit
51. The maximum number of partners in Pakistan can be fixed at the following: 20
52. Balance sheet is always prepared: As on a specific date
53. The measureable value of an alternative use of resources is referred to as: An opportunity cost
54. A quantitative expression of management objectives is an: Budget
55. A cost center is: Any location or department which incurs cost
56. At break-even point of 400 units sold the variable costs were Rs. 400 and the fixed costs were Rs.200. What will be the 401 units sold contributing to profit before income tax? Rs. 0.50
57. In considering a special order situation that will enable a company to make use of currently idle capacity, which of the following cost will be irrelevant: Depreciation
58. A fixed cost: Will not change in total because it is not related to changes in production
59. Completion of a job is result in: DR finished goods……..CR WIP
60. Operating cost in often named as: Selling plus administrative expenses
61. Expenses such as rent and depreciation of a building are shared by several departments these are: Indirect expenses
62. If under applied FOH is closed to cost of goods sold, the journal entry is: DR Cost of goods sold……..CR FOH control
63. Re-order quantity …… 3600 units, Maximum consumption …… 900 units per week, Minimum consumption …….300 units per week, Re-order period …………….….5 weeks, Based on this data Re-order level is: 4500 units
64. The time lag between indenting and receiving material is called: Lead time
65. A credit balance remaining in FOH Control account is called: Over-applied overhead
66. Direct material cost plus direct labour cost is called: Prime cost
67. Productivity means: The ability to produce
68. A segment of the business that generates both revenue and cost is called: Profit Center
69. Verification includes: (a) Checking vouchers (b) Examining audit report (c) None of these
70. Audit of a bank is generally conducted through: Routine checking
71. Economics resources of a business that are expected to be of benefit in the future are referred to as: Owner’s equity
72. Short term Loan can be best described as: If the period is less than one year
73. Maximum number of partners in a partnership firm set up in Pakistan under Partnership Act, 1932 is: 20
74. Preparation of final financial reports is governed in Pakistan under: Companies Ordinance 1984
75. Depreciation is based on: Economic life of asset
76. Inventory turnover is calculated as under: Cost of Goods sold/Closing Inventory
77. Deferred Revenue is: Liability
78. Preparation of annual report of a firm is governed under: (a) Partnership Act 1932 (b) Under partnership Deed (c) None of these
79. Deferred Taxation amount be treated as: An item in the Balance Sheet on asset side
80. Return of Equity will be calculated as under: Net profit x 100/Paid up Capital only
81. Current maturity of long term loan is: Current Liability
82. Prime cost is calculated as under: Direct labour + Direct Material
83. Process Cost is very much applicable in: Construction Industry
84. Random sampling in auditing means: Selection through scientific sampling approach
85. Increase in income constitutes: Inflows
86. M & A stands for: Mergers & Acquisitions
87. An endowment insurance policy can be taken in respect of: Life insurance
88. Acid test is the same as: Quick test
89. Return of Equity will be calculated as under: (a) Operating Profit x 100/Equity (b) Net profit x 100/Paid up Capital only (c) None of these
90. Acid Test Ratio is calculated as under: Liquid Assets/Current Liabilities
91. Deferred cost is a: Asset
92. Work Sheet is: A combination of Profit and Loss Account and Balance Sheet items
93. Banks, for the preparation of financial statements, are governed under: Banking Companies Ordinance, 1962
94. Return on investment is computed: Profit x 100/Investment
95. Rent of the premises constitutes variable expenses for cost allocation: True
96. Sugar used in a sugarcane company is: Variable cost
97. An auditor is liable under the following circumstances: Fraud perpetrated in highly sophisticated circumstances
98. Agricultural income is taxable under the Income Tax Laws of Pakistan: False
99. Principal and markup payment within one year constitutes long term liability for disclosure in the balance sheet of a company. False
100. Ordinarily one can have the following partners in a partnership in Pakistan under the Partnership Act 1932. 20
101. Working Capital finance can be termed as “Running Finance” in a limited company. True
102. Income from Capital gains arising out of trading on a stock strange in Pakistan is taxable these days: True
103. Conversion Cost is calculated as under: Labour plus overheads
104. Current Ratio can be calculated as under: Current Assets/Current Liabilities

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